Suppose a Firm Hires Both Labor (L) and Capital (C) $\mathrm { MP }_ { C } = \mathrm { MP }_ { L } = P _ { X }$

question 74

Multiple Choice

Suppose a firm hires both labor (L) and capital (C) under purely competitive conditions. The price of labor is P_L, and that of capital is P_C. The marginal product of labor is MP_L, and that of capital is MP_C. The firm sells its product competitively at a price of P_X. Which of the following must pertain if the firm is to minimize the cost of producing any output?

• A) \(\mathrm { MP }_ { C } = \mathrm { MP }_ { L } = P _ { X } \)
• B) \(\mathrm{MPC}_{C}=P_{C} \text { and } \mathrm{MP}_{L}=P_{L}\)
• C) \(\mathrm{MP} _{C} / P_{C}=\mathrm{MP}_{L} / P_{L}\)
• D) \(\mathrm { MP } _{C} / P _{X} = M \mathrm { MP } _ { L } / P _{X} \)

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Definitions:

Lewis Acid

A chemical species that accepts an electron pair from a Lewis base to form a Lewis adduct, often involved in catalysis and various chemical reactions.

Base

Substances that accept protons according to the Brønsted-Lowry definition or donate electrons according to the Lewis definition, often part of chemical reactions as reactants.

IR Spectroscopy

A technique used to identify molecular vibrations by measuring the absorption of infrared radiation, useful in determining molecular structure.

N-Butylamine

A primary amine with the formula CH3(CH2)3NH2, used in various industrial and chemical processes.